Tuesday, March 19, 2013

Wisconsin court construes consumer protection acts broadly

MBS initially lost its argument that the voluntary payment
doctrine precluded its phone cramming claims against defendants. The state
supreme court reversed and remanded because application of the voluntary
payment doctrine would undermine the core purposes of the anti-cramming statute
and remanded.On remand, the court of
appeals reinstated MBS’s various claims, including its general consumer protection law claim.

MBS alleged that defendants violated Wisconsin law by
billing MBS in a false, misleading, or deceptive manner; by omitting
information necessary to ensure that statements in the phone bills were not
false, deceptive or misleading; and by billing MBS for services that it did not
affirmatively order, and that were not required by law.One of the relevant sections of the law,
titled “Advertising and sales representations” bars any false, misleading or
deceptive statement with regard to telecommunications services.MBS stated a claim under this section because
stating on a phone bill that a customer owes money for services the customer
did not authorize is false. The law wasn’t limited to telecom providers who
deal directly with customers, so if one defendant’s statements to Wisconsin
Bell were false and that ended up harming MBS, there was a cause of
action.Defendants argued that bills weren’t
“advertisements” or “sales representations,” but the title of a statutory
section only matters if there’s ambiguity and the language actually used
covered everything.Similarly, the claim
for violation of Wisconsin’s law against negative option billing or negative
enrollment in telecom services survived.

The trial court also dismissed the general state-law false
advertising claim on the grounds that misleading bills weren’t advertisements
or sales promotions. However, the court of appeals pointed out that the
language of the statute is “extremely broad”:

No person . . . shall make,
publish, disseminate, circulate, or place before the public, or cause, directly
or indirectly, to be made, published, disseminated, circulated, or placed
before the public, in this state, in a newspaper, magazine or other
publication, or in the form of a book, notice, handbill, poster, bill,
circular, pamphlet, letter, sign, placard, card, label, or over any radio or
television station, or in any other way similar or dissimilar to the foregoing,
an advertisement, announcement, statement or representation of any kind to the
public . . . , which advertisement, announcement, statement or representation
contains any assertion, representation or statement of fact which is untrue,
deceptive or misleading.

The plain language of the law showed that statements could
be actionable even in bills or other documents not traditionally considered
ads.Indeed, the statute lists “bill” as
an example. (NB: I suspect this was another traditional/obsolete meaning of
"bill." From the OED, “A written or printed advertisement to be passed from hand
to hand (hence also called hand-bill), or posted up or displayed in some
prominent place; a poster, a placard.” This doesn’t mean I disagree with the
outcome.)The law included documents
“similar or dissimilar ” to the enumerated items, so long as they contain
misrepresentations. Thus, phone bills that induced MBS to pay for services it
did not authorize were among the prohibited misleading representations.

Defendants argued that MBS wasn’t the “public” because of
its contractual relationship with Wisconsin Bell, but the crux of the lawsuit
was that there was no contract in place with the defendants for the billed
services at issue.“[C]harges were
billed to a party who had never agreed to pay for them in the hope of tricking
that party into assuming a payment obligation.”That was within the intended ambit of the law.Nor did the voluntary payment doctrine bar
the claims, since the doctrine was “at odds with the manifest purpose of the
statute,” which was to bar a broad range of false statements and
misrepresentations without requiring proof of common-law fraud.

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